China’s crypto crackdown intensifies: After Inner Mongolia, Sichuan energy regulators are probing crypto mining
- Last week, Chinese Vice Premier Liu He called for a "severe" crackdown, reiterating the government’s position.
energyregulators are meeting local power companies to collect information on miningfarms. China’s Inner Mongolia region proposed punishments for companies and individuals involved in crypto mining.
- New rules will provide preferential management for big data centres and cloud computing companies to discourage mining.
AdvertisementChina has always maintained a tough stance on cryptocurrencies, gradually escalating rules to discourage its trade and mining. It shut down all local crypto exchanges and initial coin offerings (ICOs) in 2017. Last week, Chinese Vice Premier Liu He called for a "severe" crackdown, reiterating the government’s position. Despite the restrictions, the country still has a flourishing network of Bitcoin miners who currently lead the global race.
However, they are facing serious challenges now. According to a report by Reuters, Chinese energy regulators are meeting local power companies to collect information on mining farms. An official from the Sichuan Energy Regulatory Office of the National Energy Administration confirmed that Sichuan isn't the only area where regulators are clamping down though.
Sichuan regulators are also hosting a seminar to understand the impact of the shutdown on the local economy. The region is a popular destination for miners due to cheap electricity from hydropower projects.
A few days ago, China's Inner Mongolia region proposed punishments for companies and individuals involved in crypto mining. The draft regulation is aimed at telecommunications and internet firms engaged in mining. The administration has also said that licenses shall be cancelled if companies are found engaging in crypto mining.
The country is the world's most prominent
Huobi, the world's second-largest crypto exchange by volume, announced a few days ago that it has shut down mining hosting services and the sale of mining equipment in China. Similarly, a mining pool called BTC.TOP has also withdrawn operations from the country. A mining pool lets multiple remote users work together to mine new coins.
China has instead floated its Central Bank Digital Currency (CBDC), simply called digital yuan. It doesn't want to give up controlling the financial system and thus, vehemently opposes decentralized payments systems like cryptocurrencies. However, Bitcoin is globally under pressure as it requires a tremendous amount of energy to mine.
According to a recent report by Cambridge University, mining Bitcoin requires around 121.36 terawatt-hours a year, which is larger than the total energy used by Argentina. For China, this is a worrisome trend as it tries to lower its carbon emissions. Most of the power is generated by burning fossil fuels, making it hard to justify the logic behind mining.
Newer cryptocurrencies promise to fix this fundamental drawback of Bitcoin. But it's unlikely China will open up to them as it has been against the concept as a whole since the beginning. The roll-out of CBDC is an attempt to bring blockchain to China, minus the decentralization.
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